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PEST Analysis:

Political Factors: Historically, Bangladeshs political situation has always been volatile. Although the political situation has been somewhat stable for the last three years, in recent times the field of politics is becoming heated-up, which implies a potential instability in the near future. Amongst other factors, the biggest hindrance to business stemming from political instability is caused by strikes or hartals. So, potential strikes in future can disrupt our production and distribution operations. Amidst of the political instability, it is a good thing that every government in Bangladesh has been able to recognize the pharmaceuticals industry as a very potent sector for the nations economy. Thus the government has continued to be favorable towards the companies within this industry and has taken positive steps to improve the position of the industry. For example, the government has relaxed the regulations and introduced tax breaks especially for the pharmaceuticals companies that engage in export. This is particularly important for us since we are planning to go international through exports as well. Among other issues, high bureaucracy & corruption has always been a problem and is detrimental to business. Too much paper works and illegitimate claims by public officials increases costs as well as wastes time. Economic Factors: The economy of Bangladesh has been relatively stable over the years despite political instability, and the country had maintained a steady Cumulative Annual Growth Rate of about 6%. But there are two recent economic issues that can hurt the pharmaceuticals industry. First of all, recently the Bangladeshi currency (Taka) has sharply depreciated against dollar (1 USD = 77 BDT), and since our currency is pegged with USD, it means that BDT has depreciated against all currencies. This is a matter of concern for the generic medicine producers like us since we have to import our primary raw material, the Active Pharmaceutical Ingredient (API). A depreciating BDT means that our cost of imports will rise which will adversely impact our cost of sales and narrow our margins. Another potential economic issue could be the countrys staggeringly upward trend of inflation. As per the data on 17th October 2011, Bangladeshs inflation is at 12% compared to Central Banks targeted level of 7%. This implies that prices of goods have shoot up and peoples purchasing power has decreased. Hence there is a possibility of a demand for higher wages especially from the employees at the bottom of the pyramid. But this issue can present us with an opportunity as well; since our medicines are in the medium/ lower price range, they might become more attractive to the customers.

The bearish trend of the stock market and the investors lack of confidence can also be an issue. Since we have plans for expanding, we would need financing and the recent situation makes the stock market a less attractive option. But in the positive sense, since many large investors are turning away from the stock market, there is a bigger possibility of finding venture capitalists who are looking for investment options. Social Factors: Although people of Bangladesh have the highest average life expectancy in South Asia at 62 years, a large number of people still do not have full access to medication. In rural areas, many people die from simple illnesses like fever and pneumonia. As a producer of pain and fever medicines we have to reach our products to these rural areas in order to capture further market share. But it has been reported that a significant part of the population also suffers from diseases like cancer, cardiac problems and diabetes. This provides us with an opportunity since we are planning to extend our product line to insulin for diabetic patients, and there is evident demand in the market. Traditionally people of Bangladesh have more propensity to consume natural or herbal products and still there are many people who prefer ayurbedic or homeopathic medicines rather than allopathic drugs. This kind of tendency is detrimental to our business since we are producers of allopathic medicines. Technological Factors: Bangladesh has made significant improvements over the last couple of decades with respect to communication. The whole country is now comprehensively under coverage of rail, roads and water networks which ensures that we can distribute our product anywhere within our borders. Communication has also been made easier by the full coverage provided by cell-phone operators. Some operators have started to provide vehicle tracking service through GPS, which can help us keep track of our distribution carriers. But the tremendous traffic jams is a deterrence to our business as it often delay us in scheduled deliveries. With the advent of wi-fi, it is now possible to network all our computers, which will allow more information sharing and improve efficiency by reducing duplication of tasks. Also, availability of state of the art computers will enable us to streamline our manufacturing and inventory management. Rising energy costs and unreliable energy supply is considered as a major hindrance in doing business in Bangladesh. Frequent power cuts disrupt production and the cost of fuel for back-up generators. Fluctuation in the supply of gas is also a problem and the recent rise in gas prices is going to increase costs.


External Analysis: The external analysis consists of Porters Five Forces and PEST analysis and it affects the firm by influencing the strategy formulation. The political situation has been inherently unstable and it is expected to worsen in near-future. Unstable political situation inhibits a business friendly environment and it has unfavorable implications for our firm. The overall macroeconomic situation has particularly deteriorated in the last six months with a very high inflation, affecting most businesses. The financial sector is also ailing with banks suffering from liquidity crisis; and the investment environment is not also favorable which particularly affects our firm, especially the investment SBU. Since Bangladeshis are inherently high on uncertainty avoidance, people usually prefer to insure against risks, which is a favorable aspect to our insurance business. But at the same time most people in Bangladesh are also very conservative muslims, and they have a negative sentiment towards insurance. Moreover, since most of our people are less educated, they do not understand the sophisticated financial products, thus narrowing our scope. The development of call-center concepts, high-speed internet, and better telecommunication are especially important for our business. Due to these developments, we can serve our customers at their homes through online services.
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It is important to put the new venture in a proper context by first conducting an environmental analysis of the industry to identify the trends and changes occurring on national and international level that might impact our business. Therefore we have analyzed each and every factor that can affect our business directly or indirectly. These factors are stated below-

A countries economy is very important to consider before venturing into any business. Throughout the last 10 years many things have changed. People income has been increasing, the GDP and GNP of our country is also increasing. However the unemployment rate2.5% is not satisfactory. Still there are lots of people who are living below the poverty line. It is unfortunate but truth that those who are rich are getting richer and those who are poor are getting poorer. The urban growth rate is estimated at approximately 4.2 percent per annum therefore there is a imbalance in our economy. Another important factor that we

should consider is that peoples disposable income it is the money that people hold after all the expenses including tax. Basically this disposable income is getting lower because of the last 5 years inflationary (Inflation (CPI): 6.1%) trends in our country. However, though or target people is the upper class and higher middle class people living in Gulshan, Banani and Baridhra, we assume those people like to have candy and chocolate frequently and money is not a factors for them.

Bangladesh has a rich historical and cultural past. Residents of Bangladesh, about 98% of who are ethnic Bengali and speak Bangle, are called Bangladeshis. Urdu-speaking, nonBengali Muslims of Indian origin, and various tribal groups, mostly in the Chittagong Hill Tracts, comprise the remainder. Most Bangladeshis (about 88.3%) are Muslims, but Hindus constitute a sizable (10.5%) minority. There also are a small number of Buddhists, Christians, and animists. English is spoken in urban areas and among the educated. During the last decade Bangladeshi culture has changed dramatically due to the satellite channels. Peoples are now getting more fashionable and artistic by seeing the western world and India. Even the perception of people has changed. Its not a long time ago that people used to see chocolate and candy as childrens food but now its become adults food. Even the previously people used to think that chocolate and candy is bad for health but now scientist had proved that chocolate is very good for health. On the other hand due to the western cultural influence people are now involved in celebrating various occasion and people developed a tendency to give chocolate as a gift to their love one. Therefore due to the cultural changed we hope that this change or trends is favorable to our new business.

Technology is a very important to consider before venturing for any new business. The change in technology can hamper or even can developed the business more. However we have already known that Bangladesh is a developing country and the growth of our country is very slow. But fortunately technologically our country has developed a lot. Most importantly the communication process has improved dramatically. However, technological change can not put any barrier in our business because we will adopt a latest technology to keep our goods safe and healthy. And for business accounting process we will use latest software and other security accessories to keep our business up to date. Besides that we have developed a policy that after 2 years all the machinery and electronic equipment will be updated and serviced.

Legal Concerns:
There are many important legal issues in starting a new venture. We are starting our business under the partnership act 1932. And before starting the business we have take trade license from the city corporation by showing our contract and other document as mentioned by them with trade licensee Fee. We will also make a deed where we have written all the legal issues regarding our business like profit sharing, partners rights etc. However besides this partnership legal issues there are other issues we have to keep in mind that is the government tax, City corporation tax etc. and most importantly we have to comply by the rules and regulation regarding renting space with a proper document. Though we are mostly importing our product from foreign country we have to open LC through our

local government approved bank therefore we also have to comply by the import rules and regulation. However these legal issues can delay to start our business due to red tapes in our bureaucracy.

\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Political Environment: Politics and laws play a critical role in business. Even the best plans can go awry as a result of unexpected political or legal influences. Sound political situation helps to grow sound business condition. In our country, Political situation is not good; it always inhibits the growing of business. But the situation is getting better keep passing with the time. In this case we can face some problems to run our business due to politically unfriendly environment now, but hope a friendly environment in near future.

Economic Environment:

Bangladesh is a developing country of south Asian region. The economic condition of our country is very well. According to statistical yard book, our per capita income was $450 in the last year. But in the recent time, our economical is improving in a promising rate. The national unemployment rate has been hovering at a relatively low level for two years. On the divisional level, especially Dhaka and Chittagong continue to experience rapid expansion and prosperity. Other regions are also following them and business is booming in the grass root level. The annual growth rates of new small businesses are soaring. Many businesses continue to expand in the countryside.
Technology: Technology plays a very important role for an organization to gain competitive advantage over its competitors. Because of technological advantage a business organization is now able to provide better products and services worldwide. To maintain their competitive position in business field, a company should need to provide new and innovative thing to its customers and they do need better technology to do this task. So, technological development is very important for business organization to make a secure future. Advances in technology are difficult to

predict. We have a good technology environment in our country. So, we can easily collect them. Also, from the end of the 20th century, use of computer and other technology have increased in a dramatic rate. People are very much familiar with them and want to use them. So, any operation related to those technologies should not face any problem regarding market demand.

Legal Concern: Constitution of the people republic of Bangladesh consists of important laws and ACTS to govern the business of the country. Some of the laws are from the English Common law and other laws are from Indian Law. Here Contract ACT of 1872 and Sale of goods ACT of 1930 are followed to govern the business. These laws are written precisely and very much related to the business environment of the country. There are no

confusion going on regarding those LAWS and it supports all the legal operation to make profit. Industry Demand: Bangladesh is a populated country with a population near 15 cores. It is a place of opportunity for industrial development. Our labor market is very cheap and we have sufficient natural resources like natural gas, coal, water etc. After the liberation war, this country is developing and the living standard and life style of people in developing. So, we can say that the market is growing here and also the demand of customers.